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November 10, 2023
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How do I record a credit card payment that was made from a personal account not tracked in QB?

  • November 10, 2023
  • 2 replies
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A business credit card was used by mistake to make a personal purchase. I paid the amount to the credit card from a personal checking account not tracked in QB. How do I record this transaction since the personal checking account it not a bank account in QB? Thanks.
Best answer by Rainflurry

@TasteOfGraze 

 

Ignore @CharleneMaeF 's response.  If you follow those instructions, you will have an entry in the company's books.

 

IMO, the best way to handle this is to disregard the transaction.  Do not make an entry in the company books since this was a personal charge and paid personally.  When you go to reconcile the credit card, reduce the ending balance by the amount of the charge and everything should balance.  

2 replies

November 10, 2023

I've got different ways in handling the credit card payment, TasteOfGraze.

 

You can ignore those personal expenses since the purpose of adding it is to track business expenses. Nonetheless, I recommend reaching out to an accountant for further guidance. Doing so ensures the accuracy of your books after recording this.

 

Alternatively, we can create a clearing account. It is used to move money from one account to another when you can't transfer the fund directly. Here's how:

 

  1. Go to the Gear icon and then select Chart of Accounts.

  2. On the Chart of Accounts screen, click the New tab.
  3. Choose Bank for the Account Type. You may choose any detail type you want for your clearing account.
  4. Type in the Name for the clearing account.
  5. Ensure the balance is zero before clicking Save and Close.

 

Next, record the credit card payment to the account you've created. I'll show you how:

 

  1. Go to + New and then click Pay down credit card.

  2. Select the credit card you made the payment.
  3. Enter the amount.
  4. Add the date of the payment.
  5. Choose the clearing account you paid the credit card with.
  6. Once done, click Save and Close.

 

After that, enter a record a deposit to this false bank account:

 

  1. From the + New menu, hit Bank deposit.

  2. Under Account, select Clearing.
  3. On the Add funds to this deposit section, add the purchase and the amount.
  4. Once done, Save and close.

 

In addition, I've added an article that'll help you learn more about handling a personal expense in a business account in QuickBooks Online: Pay for your own purchase from a business credit card or bank account.

 

Should you need further assistance tracking the payment in the program, please keep us posted in this thread. We're always ready to help you out.

November 10, 2023

Thanks, @CharleneMaeF. I went with @Rainflurry 's suggestion, seems to be simpler than setting up the clearing account. Thank you for your help.

Rainflurry
November 10, 2023

@TasteOfGraze 

 

Ignore @CharleneMaeF 's response.  If you follow those instructions, you will have an entry in the company's books.

 

IMO, the best way to handle this is to disregard the transaction.  Do not make an entry in the company books since this was a personal charge and paid personally.  When you go to reconcile the credit card, reduce the ending balance by the amount of the charge and everything should balance.  

November 10, 2023

Thanks, @Rainflurry This is a much simpler solution. I went with your recomendation more or less. I made a journal entry in the credit card account to debit the credit card charge, and I credited the owner's equity account. Thanks for the help.

Rainflurry
November 10, 2023

@TasteOfGraze 

 

"I went with your recomendation more or less. I made a journal entry in the credit card account to debit the credit card charge, and I credited the owner's equity account. Thanks for the help."

 

That was not my recommendation and that's not the proper way to do it.  If you do it that way, you will increase the equity in your business by the amount of the personal credit card credit card charge which didn't happen.  The only proper way to do it is to ignore the transaction and not enter it in the company books.